This problem came up with Molecules in the past, and the solution that was opted for was to remove the 'Update data' checkbox.
The problem is stemming from calls in ProtSequenceTriggerFactory.ProteinIdentity.beforeInsert() and NucSequenceTriggerFactory.NucleotideIdentity.beforeInsert(). In both, there's a line that calls setIdentity(), and the final parameter 'enforceUniqueIdentity' has been introduced and set to 'true' as of 3/27/22. (See PR here: https://github.com/LabKey/biologics/pull/1214
Presumably the desired fix is not to remove the 'Update data' checkbox but instead to have the behavior working. Detangling this would optimally include being able to pass context from the import that a 'merge' is desired. Simply setting 'enforceUniqueIdentity' to 'false' does not wholly resolve the problem.
I'd be happy to take a look at this one! But I heard in standup that Marty has extra bandwidth and he also was the person who implemented the 'Update data' functionality (IRRC) so he would also be a good candidate.